Wagoner May Say GM Lost $2 Billion on Leases in SUV-Value Drop
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July 31 (Bloomberg) -- Collapsing values of leased sport- utility
vehicles may force General Motors Corp. Chief Executive Officer Rick
Wagoner to announce $2.3 billion in losses tomorrow on top of more than
$1.4 billion that analysts have forecast.
Losses on so-called residual values of the vehicles may also prompt GMAC
LLC, partly owned by GM, to ``significantly'' curtail leasing, said
Lehman Brothers analyst Brian Johnson. Leasing accounts for 28 percent
of the Detroit-based automaker's U.S. sales this year.
Chrysler LLC said it would stop leasing and Ford Motor Co.'s credit unit
last week reported a $2.1 billion pretax writedown for losses on the
transactions, twice what analysts forecast.
``It's surprising how quickly these values have fallen off a cliff,''
said Mirko Mikelic, senior portfolio manager at Fifth Third Asset
Management in Grand Rapids, Michigan, which oversees $22 billion in
assets, including GM bonds.
The automaker's leasing loss may exceed $1 billion, he said. ``Residual
values are going to be the wild card for GM in the quarter.''